BENSON BYTE: Josh Rauh - "The California Wealth Tax Would Have Cost 38 Billion"

SPEAKER_1 (0:00)

Now it's time for another Guy Benson Show, Benson Bite, where we bring you the day's most interesting interviews in a bite-sized package. For the full episode, visit guybensonshow.com or wherever you listen to podcasts.

Guy Benson (0:16)

With us here in studio at the Hoover Institution is Professor Joshua Rauh.

He is the George P. Schulz Senior Fellow in Economics here at the Hoover Institution. He's also a Professor of Finance at Stanford Graduate School of Business. He was Principal Chief Economist on the President's Council of Economic Advisors in the first Trump administration and has a very impressive long resume. Professor, great to have you back on the show. Welcome.

Joshua Rauh (0:41)

Great to be with you guys always and welcome to California, the epicenter of progressive politics.

Guy Benson (0:47)

Yes.

Joshua Rauh (0:47)

Not the Hoover Institution though.

Guy Benson (0:48)

No, no. This is like one rare exception to the overall rule in this state. But there was this development, we talked about it on the show, with you, with others. Looking at some of the ballot propositions that were here in California, one that was very destructive potentially was this wealth tax, that Bernie Sanders was pushing very hard.

You had a lot of leftists both here at home and abroad pushing for this. Some of the unions got involved, but a lot of even the lefties who run this state were not sold. You did some seminal work on pushing back on this thing. Believe it or not, the people of California who make lots of bad decisions all the time seem to have dodged a bullet on this one and rejected this effort. Give us the backdrop to this.

Joshua Rauh (1:36)

Well, and on a night when it was a landslide for progressives around the country, right, progressive causes, still this wealth tax that was on the California ballot failed. This would have been, talk about earthquakes, okay? This really would have been something seismic. This would have been the first wealth tax really in American history.

And if you think about what this tax, okay, this was otherwise pitched as being a billionaire tax because one of the key features of it was it was going to impose a 5 percent, one time, supposedly one time wealth tax on billionaires. But that one time was a nudge, nudge, wink, wink, because it also had tax that would allow the legislature of California to impose future wealth taxes at potentially other rates and other thresholds pretty much on whoever they wanted to. So this would have been really a major change.

Guy Benson (2:24)

What they were claiming on the top line was, oh, but it's just a one time thing and it's just for billionaires, and it's 5 percent of what, net worth?

Joshua Rauh (2:31)

Of net worth, and that's what's really important for everybody to understand. This is not an income tax, okay, an additional income tax, this is a tax on your assets.

And that is really stepping into new territory for the United States of America. This measure, they're still counting votes. We count votes very, very slowly in California.

Guy Benson (2:50)

So I've noticed.

Joshua Rauh (2:51)

One piece of paper at a time.

But it's still being counted. It looks like it's going to fail. The no's are ahead by about 6.5 percentage points and they're about-

Guy Benson (3:01)

I've seen some of the people have actually, some outlets have called it for no.

Joshua Rauh (3:04)

Some outlets have called it for no, and I think it's definitely headed for failure. And this is maybe one bright spot that even this, and even for California, this was a bridge too far for folks.

Guy Benson (3:17)

Even in an environment like this, to your point.

Joshua Rauh (3:19)

Even in an environment like this.

Guy Benson (3:19)

So how did this come to be? Who got this on the ballot? Who was pushing for this?

Joshua Rauh (3:28)

This ballot initiative was being pushed by the SCIU West Healthcare Union. So it was a healthcare union, and they were very concerned about the possibility of losing resources due to changes in the federal tax law from last year's House Reconciliation Bill. So they were very concerned about that. You certainly don't see in the trends. I'll tell you, federal spending to California for Medi-Cal, our California Medicaid is up 14 percent this year. I mean, this is the year that these cuts were supposed to take place.

We're not even seeing it. But they said there is a healthcare emergency now in this state because of this one big beautiful bill, healthcare emergency, and we need 100 billion.